Direct mail and coupons is a huge business. It is not only effective but also receivers of these promotions find value in it. It allows merchants a chance to reach new customers and consumer-packaged goods manufacturers to introduce or promote products to a wide audience. The receivers have a chance to save money and an incentive to try out new products.
The Internet looks poised to bring a whole new level of effectiveness and personalization to direct mail and coupons. Until now the methods introduced on the Internet include direct offers via email and coupon portals. Unfortunately both these methods have proven ineffective.
Email has proven to be an inadequate medium for online promotions because of its inherent “free” nature. In the offline world of postal direct mail, it costs promoters to send offers to households. The promoter has to pay for printing and mailing costs which would range anywhere from 40 cents to a few dollars for each household mailed, therefore, even if the promoter could obtain the address of every household in the US it would not be cost effective to send them to every single household. But, because sending emails is free, promoters have no barrier to send an email to every email address they can get their hands on—leading to the practice of sending massive amounts of untargeted unsolicited email—Spam. Not every promoter participates in spamming, but because of the rampant practice of Spam, users have become numb to offers received through email—whether they be targeted or not—thus crippling a potentially effective channel for direct marketing and promotions.
Coupon portals such as MyCoupons.com, Valpak.com and Coolsavings.com have been set up to serve coupons of merchants and consumer goods manufacturers to Internet users. Unfortunately, most users do not actively search for coupons and offers; they merely take up the offer when it is presented to them, either through coupons received in the mail or in the Sunday newspapers. The majority of the users who frequent coupon portals are “coupon fans” and penny pinchers, not necessarily the kind of demographic the promoters are looking for.
Web-based email providers like Hotmail and Yahoo have also set up their own direct-email services where users opt-in to receive offers from merchants who sign up with the providers to send targeted offers to users of these web-based email providers. One such service is Hotmail's MSN Featured Offers. The drawback is that recipients need to opt-in to receive these promotions and the promotions still clutter the user's inbox and they do not expire. One of the further drawback is that these promotions suffer the drawback of email, where the user is forced to open the promotion to see its contents as the subject line of the promotion such as “HP Printer 5500C for $100” often does not provide enough information for the user (What is the HP 5500C? What does it look like?).
One method used by promotions provider Greenmail.com is where promotional graphics are shown instead of text in the listing of promotional offers. This method suffers from a cluttering of the screen as static graphics take up a large portion of the browser screen space as opposed to text (Greenmail.com is not an email site).
Aside from the major web-based email providers like Hotmail and Yahoo, there are many smaller Internet Service Providers (ISP) who provide web-based email service to their customers. Since these ISPs are focused mainly on the operations of their network, they do not have the resources to set up their own direct marketing organization and would benefit from being part of an affiliate system that would supply the technology and direct marketing content to them.